HR Finds Work-Share Programs a Comfort During Hardship

By Paul Bergeron September 1, 2020
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HR Finds Work-Share Programs a Comfort During Hardship

​Fort George Brewery in Astoria, Ore., turned to the state's work-share program to keep staff employed.

​The rash of furloughs and layoffs nationwide and across many industries since April has forced HR departments to seek ways to avoid headcount reduction and keep the workforce reasonably well-compensated.

Work-share (or shared-work) programs are a little-known and rarely used state-provided benefit that subsidizes the wages of workers who are kept on the payroll with reduced hours instead of laid off. These unemployment insurance programs are in 26 states, and they are a powerful solution for many companies.

By reducing hours and shifting work among staff, the programs allow employees to continue to be paid and retain their company benefits, including health care, and also become eligible for unemployment benefits. News reports have shed a positive light on these programs recently, and many companies that were not aware of them are now embracing this approach.

Although they create a temporary administrative strain on HR teams, once in place, work-share programs pay dividends in improved morale and productivity, say HR consultants. In many cases, these programs enable companies to hold on to their most valuable staff during the downturn brought about by the coronavirus pandemic: workers who later will play critical roles as the U.S. continues to transition toward a more normally functioning workplace.

Worst-Case Scenario Brainstorms

State-mandated stay-at-home restrictions put in place across the country in the spring (and that were carried over into the summer in many states) crippled a wide range of businesses, with restaurants and manufacturing among the most affected.

"We could sense by reading the headlines that Oregon was going to shut down restaurants and bars, so we brainstormed some worst-case scenarios and looked for solutions," said Zack O'Connor, human resources director at Fort George Brewery in Astoria, Ore. "Work share looked like something that could help our situation because it could support the financial circumstances for our employees."

Fort George Brewery is a regional craft brewery with a craft distribution arm and several brew pubs. It has used Oregon's work-share program since March after the state ordered on-premise businesses to close.

"That closure not only closed our own restaurants, but the majority of our distribution accounts as well," O'Connor said. "It put a pretty major wrench in our brewery's production schedule."

At that time, the brewery had 160 employees. It temporarily furloughed 120 employees, most of whom worked in its restaurants. Twenty-one employees participated in the work-share program.

As with many businesses, the operating climate has improved gradually. Fort George Brewery has reopened one of its restaurants and expanded its to-go operations, bringing its brewing and distribution crews back entirely. So far, all but three of its work-share staff are back to their full-time schedules, O'Connor said.

"We were able to recall or rehire about 40 employees, but ultimately, we had to permanently lay off 70 staff members," O'Connor shared about the reality that food-service companies are enduring.

Putting the work-share program in place involved a lot of administrative legwork, mostly data entry, O'Connor said. "Working through this, you have to stress patience with your employees because in many cases, the state was unable to limit disruptions to their original unemployment payments," he said. "Several of our work-share staff are still waiting on isolated payments for weeks claimed as far back as May."

A few hundred miles north, in Bellingham, Wash., Kulshan Brewing Company experienced similar circumstances and then leaned on its state employment commission and devised a plan, said Erica Baldridge, SHRM-CP, director of human resources. As a result, the company didn't lay off any of its 50 employees, despite a decline in production due to Washington's social-gathering restrictions.

"Our goal was to not let go of staff and to do all we could to keep them whole financially," Baldridge said. "All 50 were put on the work-share program initially, but that number has been reduced to about 25 percent of staff as operations have improved and restrictions have been lifted."

When Kulshan announced the work-share plan to its staff in early April, "all were excited about knowing that they'd be earning wages, especially given the extra $600 per week that the federal government kicked in through the CARES [Coronavirus Aid, Relief and Economic Security] Act," she said. (The $600 bonus expired in late July, and unemployment insurance support is now limited in amount and location.)

"My biggest administrative role was to double-check each week the number of hours that our employees were posting when submitting to the state for unemployment benefits, compared to what showed on our payroll," Baldridge said. "It took extra time, but it was an easy check, and it was worth it knowing our employees were earning a comparable salary given the situation."

Hybrid Plan Thrives in Massachusetts

Work-share programs vary by state, and Boston-based Mass Bay Brewing Company found the version available in Massachusetts to be good but not perfect, said Richard Ackerman, assistant vice president of human resources. His approach was to adopt some key aspects of the state program to create a hybrid plan that made the most sense for his employees.

Before the COVID-19 pandemic, employee-owned Mass Bay had about 200 full-time employees. By June, approximately 22 percent of workers for the company had participated in the work-share program.

"We based our program on the state of Massachusetts' model but did not follow it completely," Ackerman said. "We wanted to create a plan that provided the most benefit for our employee-owners. This resulted in a hybrid plan."

For instance, the state plan required that the work reduction percentage must be the same for each employee and between 10 percent and 60 percent, which Mass Bay decided against. "We were unable to do one broad brushstroke for our plan," Ackerman said. "We needed work share to be based on the needs of the organization and its specific sectors. We may have needed additional work in our production, but not in our restaurant. The state's plan would not have allowed us to do this."

Mass Bay also passed on the requirement to keep a precise log of participating employees' paid hours for each week. For instance, if an employee works more or fewer hours in a week than the hours listed on the plan, no benefits will be paid unless other paid leave is used.

"The administration was too heavy for us," Ackerman said. "As a result, we were aware of the amount of hours that would or would not qualify an employee-owner for unemployment in a given week, and we made every attempt to create the work-share schedule for each employee-owner to not have a financial impact on their weekly pay, either unemployment or a check from us for worked hours."

When Massachusetts closed sit-in service for bars and restaurants, Mass Bay lost 35 percent of its business overnight, Ackerman said. "We don't expect that part of our business to return to normal for at least another 18 months. For a while, until June, our restaurants were closed, and we were only able to offer curbside pickup and delivery. During this time, our sales were focused on off-premise, where people could pick up our beer or buy it at a liquor store."

Back in March and April, the company furloughed its part-time employees who worked in the restaurants. For its full-time staff, it began evaluating its work schedule daily and weekly.

"Producing and selling beer involves a lot of skills, and it's a process," Ackerman said. "We focused on our production schedule and staffed based on those specific demands. During times when we knew we needed one skill, such as warehouse support, those employees worked, and we would have staff from other departments help. These types of labor are needed at different times, and we used our work-share model to assist and supplement those needs."

Some politicians argued that the $600 bonus provided to unemployed workers under the CARES Act through late July was a disincentive for many employees to return to work because working would amount to a cut in pay. Ackerman said his staff viewed it otherwise.

"Our company has a strong culture, and our employees really enjoy each other, and they enjoy coming to work," Ackerman said. "They weren't the type to say, 'It doesn't make financial sense for me to work right now.' We had an all-hands-on-deck attitude.

"We were deliberate with communication with staff about our policy and how it affected them throughout spring and summer," Ackerman said. "We had weekly 'fireside chats,' we required virtual trainings, and we surveyed them regularly to check on morale. By far, the sentiment shared the most has been uncertainty with what this pandemic will bring. Our staff really never looked at the company to blame for the tough situation. They thought of it more as living in this reality."

Staffing Preservation

MAG Automotive, a machine tooling business in Sterling Heights, Mich., began its work-share program in early April because, HR director Jeff Douma explained, business had "slowed so much that we just didn't have the work to give to people." Many employees were furloughed so they could maintain their benefits, he said. Sixty percent of staff were given reduced hours, such as a four-day weekly schedule.

"This allowed us to alternate shifts based on what jobs we had," Douma said of his 220 employees.

Currently, 40 employees are in the work-share program, and Douma hopes to reduce that number to 30 by September. No one is furloughed at this time.

Douma learned of the program two years ago while attending an HR conference where a panelist from the state of Michigan presented on the topic. "But we never actually implemented it," he said. "Because the machine tooling business can run hot and cold, especially toward the end of the year, it sounded like a plan we could do when things slowed around winter to help preserve our workforce. Ours is a competitive business, and you'd hate to lose good workers, but in the past two years, we've been busy even late in the year."

When COVID-19 hit, Douma said he had no choice but to implement work share. In Michigan, the most a person can earn in unemployment benefits is $360 per week. MAG workers received one-fifth of that, or $72 per week. Soon after its program began, the federal government kicked in an extra $600 per week, so "making $672 per week in unemployment benefits was a shocker for some of our staff."

Implementing the program involved many long hours and frustration for the company and its staff, Douma said. The state's computer system crashed often as it adjusted to a new way of certifying and paying out benefits.

Douma said the process has since been improved by the state employment commission, an update reported by other HR professionals nationally. As a result, work-share programs are flourishing across the country.

Paul Bergeron is a freelance writer based in Virginia.

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